All Rights Reserved
AccessEcon LLC 2006, 2008.
Powered by MinhViet JSC
ralph lauren polo

Andrew Wait and Vladimir Smirnov
''Industry sunk costs and entry dynamics''
( 2004, Vol. 12 No.4 )
We explore an investment game where industry sunk costs provide anincentive for a firm to be a follower into the market as opposedto a leader. For some parameter values, every firm could have adominant strategy to wait, even though immediate entry is sociallyoptimal - this is a like prisoners' dilemma. In equilibrium, afirm is more likely to have a dominant strategy to wait with anincrease in the number of potential entrants. Finally, theequilibrium can display an entry cascade.
Keywords: coordination game
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
Manuscript Received : May 25 2004 Manuscript Accepted : Jun 04 2004

  This abstract has been downloaded 2002 times                The Full PDF of this paper has been downloaded 149694 times